The initial public offering (IPO) of Le Travenues Technology continued to attract a strong response from the investors during the third and final day of the bidding process as institutional investors joined the party. The issue was booked more than 9 times by the end of day two.
The Gurugram-based Ixigo is selling its shares in the price band of Rs 88-93 apiece. Investors can apply for a minimum of 161 shares and its multiples thereafter. It is looking to raise Rs 740.10 crore via IPO, which includes a fresh share sale of Rs 120 crore and an offer-for-sale (OFS) of 6,66,77,674 equity shares.
According to the data, the investors made bids for 2,06,44,97,687 equity shares, or 47.17 times, compared to the 4,37,69,494 equity shares offered for the subscription by 2.15 pm on Wednesday, June 12. The three-day bidding for the issue, which had kicked off on June 10, concludes today.
The allocation for retail investors was subscribed 41.91 times, while the portion reserved for non-institutional investors saw a subscription of 83.02 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was booked 30.99 times cent times as of the time.
Founded in 2006, Le Travenues Technology is an online travel agency (OTA) that enables travelers to book train, flight, and bus tickets as well as hotels under the brand name 'Ixigo'. The company has the highest app usage among OTAs with a cumulative 83 million monthly active users across its apps.
The grey market premium of Ixigo has remained formed after the first day of the bidding. Last heard, the company was commanding a premium of Rs 35-36in the unofficial market, suggesting a listing pop of about 38 per cent for the investors. However, the premium in the grey market stood around Rs 28-30 levels a day earlier.
Brokerage firms are mostly positive on the issue suggesting investors to subscribe to it on the back of industry tailwinds, brand recall and business scalability, resulting in expansion of profitability. However, some analysts are skeptical over rich valuations and dependence on a broad range of travel suppliers.
At the upper price band, on post issue basis, Le Travenues Technology is valued at 72.9x P/E times on annualized FY24 earnings and at 5.5 times P/S. We believe the issue is priced fairly given the prospects of the OTA industry, said Indsec Securities.
"We have a 'subscribe' rating on the company on account of its sizeable and established user base, comprehensive travel utility and technology based transactional offerings, experienced management team and ‘next billion user’ focused strategy which position the company well to capitalize on the burgeoning Indian travel market," it said.
Ixigo mobilised Rs 333 crore from anchor investors by allocating more than 3.58 crore equity shares to 23 investors at Rs 93 apiece. It reported a net profit of Rs 65.81 crore with a revenue of Rs 497.10 crore for the nine months ended on December 31, 2023. The company's bottomline came in at Rs 23.40 crore with a revenue of Rs 517.57 crore for the financial year 2022-23.
Le Travenues recently unveiled ixigo PLAN, an AI-powered travel planner that provides users with detailed itineraries and real-time destination information. It also introduced a generative AI plugin enabling conversational interactions. The company is solidifying its position as India's fastest-growing OTA, it has a history of negative cash flows from operations, said SMC Global.
This trend may continue in the future, which could be a concern for some investors. However, long-term investors might find LTTL's growth potential attractive, considering their ability to tolerate the risk associated with negative cash flow, it added while giving it a two-star rating out of five.
Le Travenues Tech has reserved 75 per cent of the net offer for the qualified institutional bidders, while non-institutional investors will get 15 per cent of the allocation in the IPO. Remaining 10 per cent of the net offer shall be reserved for the retail investors.
Ixigo has a significant market share across various segments and it is leading OTA for the ‘next billion user’ with the highest monthly active users for mobile apps across all key OTAs as of September 30, 2023. It has developed advanced and scalable technology platforms allowing them to address the requirements and problems of travelers, said Ajcon Global's IPO note.
At the upper price band of Rs 93 the issue is priced at P/E multiple of 39.91 times its post IPO 9MFY24 annualized EPS of Rs 2.33 and at a multiple of 169.09 times its post IPO FY23 EPS of Rs 0.55. We give a 'subscribe' rating to issue, it said.
DAM Capital Advisors (formerly IDFC Securities), Axis Capital and JM Financial are the book running lead managers of the Ixigo IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with Tuesday, June 18 as the tentative date of listing.